One of the most common questions people ask about retirement planning is, “How much money do I need to save?” It’s an important question — and one that doesn’t have a simple, one-size-fits-all answer. The amount you’ll need depends on your lifestyle, goals, income sources, and how long you expect your retirement to last.
That said, there are clear steps you can take to calculate a retirement savings target that’s realistic and personalized.
1. Start With Your Retirement Lifestyle in Mind
The first step is to picture what your retirement will look like. Do you plan to travel frequently, spend winters somewhere warm, or simply enjoy a comfortable lifestyle close to home? Your spending needs will depend on the lifestyle you want to maintain.
Many planners use the 70–80% rule as a starting point — meaning you may need about 70–80% of your pre-retirement income each year to maintain your lifestyle once you stop working. But if you plan to travel more or have higher healthcare costs, you may need more.
2. Estimate Your Annual Retirement Expenses
Once you have a vision for your lifestyle, the next step is to estimate your annual living expenses. Think of these in two categories:
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Essential expenses – Housing, food, utilities, healthcare, insurance, and transportation.
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Discretionary expenses – Travel, hobbies, entertainment, and gifts.
It can help to review your current spending to see what might change in retirement. For example, your mortgage may be paid off, or you may no longer have work-related costs like commuting or professional clothing.
3. Identify Your Retirement Income Sources
Next, estimate how much income you’ll have coming in during retirement. This might include:
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Government benefits – Canada Pension Plan (CPP) and Old Age Security (OAS)
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Employer pensions – Defined benefit or defined contribution plans
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Personal savings and investments – RRSPs, TFSAs, non-registered investments, or other assets
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Other income – Rental income, part-time work, or business income
Understanding these income sources helps determine how much of your retirement income is already “covered” — and how much you’ll need to generate from personal savings.
4. Calculate the Gap — and Your Savings Target
Once you’ve estimated your expected expenses and projected income, subtract the two to determine if there’s a gap. That gap represents the portion of your retirement income that must come from your personal savings and investments.
A financial planner can use tools and retirement calculators to determine:
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How much you need to save annually to close the gap
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The rate of return required on your investments
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How long your current savings will last based on your spending plan
For example, if you expect to need $60,000 a year in retirement and $40,000 of that will come from government benefits and pensions, you’ll need to fund the remaining $20,000 per year from your own savings.
5. Consider Longevity and Inflation
It’s important to plan for a retirement that could last 25–30 years or more. While that’s great news for longevity, it also means your money must continue working for you. Inflation will gradually reduce purchasing power, so your investments need to grow enough to keep up with rising costs.
This is why maintaining a diversified portfolio and reviewing your plan regularly is essential — what works at age 60 may need adjusting by age 75.
6. Review Regularly and Adjust
Your retirement plan isn’t something you create once and forget. Life events, economic changes, or shifts in your personal goals can all affect your savings strategy. Reviewing your plan regularly — ideally with a trusted financial advisor — ensures you stay on track and make adjustments when needed.
The Bottom Line
Determining how much you need to save for retirement starts with understanding your goals and your current financial picture. With thoughtful planning, realistic projections, and regular reviews, you can create a strategy that helps you retire with confidence and peace of mind.
If you’re unsure where to begin, a personalized retirement income plan can help answer questions like:
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How much do I need to save?
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What rate of return do I need?
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How long will my savings last?
These are the types of questions I help my clients answer every day — and the earlier you start, the more flexibility and freedom you’ll have to shape your ideal retirement.